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Tuesday, 8 February 2005
Page: 27

Senator FIFIELD (2:14 PM) —My question is to the Minister for Finance and Administration. Will the minister inform the Senate of recent indicators as to the strength of the Australian economy? Can the minister inform the Senate how these results have been brought about and what is needed to maintain a strong economy?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Fifield for that good question and acknowledge his great interest in matters relating to the economy. Australia’s economy is now in better shape than it has been for decades. We have interest rates on mortgages of 7.05 per cent, compared to an average of 12.75 per cent under our predecessors. The annual inflation rate is 2.6 per cent, down from an average of 5.2 per cent under the previous government. We have paid off $73 billion of the $96 billion of debt we inherited. Unemployment is down to 5.1 per cent, the lowest it has been since November 1976. The share market gained 23 per cent in the course of 2004, and on 30 December the share market reached an all-time record high.

We have a number of positive business surveys showing a lot of confidence in the business sector. The NAB business survey showed that corporate profitability reached record levels in October and November. The census survey of small and medium businesses showed confidence about the next 12 months at record highs. We have seen record sales for the Australian car industry. Consumer confidence is at its second highest level in the last 30 years. Only last week the highly respected OECD released its economic survey of Australia, which included a very strong endorsement of the government’s economic management and this country’s economic performance. That survey stated that Australia had become a model for other OECD countries. It praised the structural reforms introduced by successive governments and the medium-term macroeconomic framework introduced by our government—changes that the OECD said had conferred an enviable degree of resilience and flexibility on the Australian economy. The OECD predicted a continuation of strong, low-inflation growth and continued low unemployment.

The OECD did have some very pertinent messages about the future for Australia. It highlighted that our two great long-term challenges are to raise living standards and to prevent the fiscal burden rising significantly in the face of an ageing population. In that respect, the OECD endorsed the government’s pro-growth approach to addressing the challenges posed by demographic change through increased work force participation and greater productivity. In keeping with that view, the OECD made it clear that the pace of reform needs to be continued if we are to maintain a strong economy.

I think it is worth referring to the suggestions the OECD had for reform in Australia. It specifically recommended further industrial relations reforms, including the simplification of awards and a lesser role for centralised wage fixing, basing safety net wage increases on productivity and the employability of low-skilled workers. It recommended reforms to unfair dismissal, continued water reform, ongoing efforts to encourage work force participation by older workers and the full sale of the government’s remaining shares in Telstra. It also recommended changes to the eligibility for the disability support pension, specifically to discourage welfare dependency and to encourage work force participation.

That is an agenda which this government will pursue during this term of office. We are determined to progress those reforms, and we would welcome the support of the opposition, with its new found interest in the economy, and indeed of the minor parties to ensure that the reforms recommended by probably the world’s most prestigious independent economic consultancy are carried out. They are needed if we are to maintain the very great strength which we have built up in this economy over the last nine years.